Ideally, here's how some consultants say developing and distributing a new mutual fund is supposed to work: Product development teams and top leadership at mutual fund companies come up with a set of goals for investors and the company. Development teams then put together a new fund based on those goals. A portfolio manager, who understands those goals, oversees the product. Wholesalers communicate the goals to brokers. Brokers, in turn, communicate the fund's goals clearly to investors who buy into it. Everybody understands the plan.

But here's how it often really works, according to Lisa Cohen, an executive at sales consulting firm The Collaborative: Product developers put together a value fund because those types of products are doing well in current markets. Portfolio managers then manage that value fund. Wholesalers tell brokers to sell the fund because it will perform well. Brokers try to sell the fund to investors while using ad-libbed or stale sales strategies. The individual investor, who has a headache, goes home to discuss the fund with his or her spouse. Too few people understand the plan and the fund's objective, she said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.